Академический Документы
Профессиональный Документы
Культура Документы
A Project
Submitted By
MC150401572
Muhammad Arslan Shah
Dedicated to My Parents
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ACKNOWLEDGEMENT
It is the guidance from the Almighty ALLAH that shows the man light in the darkness and the
person finds his way in this light. Without this helping light, person is nothing but a helpless
creation. All respect to the Last Prophet, Hazrat Muhammad (Salalahualhe waalihi waslam), who
brought the light of knowledge and truth when the humanity was wandering in the desert of
ignorance May Allah showers his blessing upon him (PBUH).The teaching of the Holy Prophet
Muhammad (PBUH) were also the continuous source of guidance for us, especially his order of
getting knowledge and fulfilling once duty honestly was key motivation force for us.
I would like to extend my appreciation to such a personality Mr. Tassawar Hanif Sahabyal (Head
of Import, Logistics & Warehousing) who teach me and make me able to make this project. I am
heartily thankful to all of my colleagues, especially Miss Nadia Bashir and Mr. Furqan whom
help and encouragement, guidance and support from the initial to the final level enabled me to
develop an understanding of the subject.
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ABSTRACT:
The purpose of the project is to find relation between distribution network and firm performance.
What is the role of distribution network in customer’s satisfaction? Is firm lost sales due to
deficiency in Supply chain system in keeping view appliance industry of Pakistan .
This project contains the brief introduction of appliances industry of Pakistan, its products and
distribution network model in this sector. A questionnaire is routed in Appliances industry to get
feedback. Target population is Supply chain managers and Executives of appliances industry.
After analysis of data results show very strong relation in customer satisfaction and Distribution
network. It also proves the hypothesis of relation between firm performance and Distribution
network. Survey also shows the communication gap between management and end level
executives which effects firm’s performance.
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Table of Contents
(i) ACKNOWLEDGEMENT………….…………………..……………. 3
(ii) Abstract ………………………….…………………..……………….. 4
1. Introduction ………………..………………………………..….….….7
5. Conclusion …………………………………...………..………….…32
6. References ……………..…………………………………....………33
7. Definition…………………………………………………………….34
8. Appendix……………………………………………………………...35
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1. Introduction:
Distribution network is an important part of supply chain and can be defined as network of
storage facilities, transportation system and interrelated arrangement of people, which aims to
transfer final goods from producers to customers, typically retailers [1] . Distribution
network design concerns with the structure of distribution network: determining the number of
echelons in supply chain and for each echelon number, type, size and location of
facilities, where the finished goods are stores on the way to consumers
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1.1. Objective:
The objectives of this project are to find relation between
1.3. Rational:
According to Pakistan Economy Survey 2018-2019, The performance of appliances is
largely dependent on global raw material prices such as steel and copper which makes the sector
vulnerable external dynamics. Despite this the sector growth is on account of electric motor
growth recorded at 142.16%, electric transformers 42.92%, Air conditioner 23.63 and deep
freezers 5.18%. Here we discuss some important points how this study would be helping further
for Practitioners, Policy Makers and Researchers.[2]
Distribution Networks plays vital role in increasing profit of firm at least cost. In 2017, second
largest company in appliances sector PEL has bear double distribution cost than 2016, which
increase the cost of goods sold and also the decrease profit margin.[3]
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This is a known factor that present appliances industry is mainly based on Chinese technology
and majority local manufacturers have technical collaboration or joint ventures with Chinese big
companies. It is also worth to mention that Pakistan and China collaboration at government level
provided good playing field to only promote imports while focused was not been on localization.
Several FTAs(2) are available, under invoicing(3) is another issue that has been addressed in
previous years and both governments are taking measures to curb this. FTAs are discouraging
localization initiatives those should be a key factor with present numbers of manufacturing units.
Pakistan is a two hundred million population country standing on no 6th position in the world.
Having great potential of retail market that includes appliances sector. As some appliances are
necessity of each home and with the improvement of life style luxury will also be part of life and
will give an ultimate boost in numbers of sale and hopefully a continuous growth will be
observed. .
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Fig 1
Fig 2
Notes Related to Data
1) Data of production from 2015 to 2017 is taken from reference to actual import data of customs with
some reference components of each product.
2) 2018 to 2022 is assumption based on average growth of industry like 10% in general while in case of
Automatic Washing Machine 40% and Semi-Automatic WM 5%.
3) Appliances considered Refrigerators, Deep Freezers, Air Conditioners, Washing Machines, TV, Micro
Wave Oven and Water Dispenser.
4) Value in dollars also taken assumption of average sales prices in US$ considering exchange rate 105
from 2015-17 and 112 from 2018-22.[4]
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3. Air Conditioner
4. Air Coolers
5. Deep Freezers
7. Cleaning Appliances
8. Gas Appliances
9. Geyser Manufacturers
16. Humidifiers
The domestic home appliance engineering industry consists of medium to large size units in
organized sector with enough managerial capacity. Product wise analysis of the industry is as
follow:-
Organized Sector
This industry started in the same period as the air conditioner industry in Pakistan. It
withstood the reform made with regards to the supply and worked under high taxes. At present,
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the industry produces around 150,000 units including both single tub washers and semi-
automatic twin tub (125,000) machines but there is no fully automatic products in this area yet.
Unorganized Sector
The unorganized sector is concentrated in the areas of Lahore and Gujranwala and it is much
larger than the organized sector. There are no official facts and figures of the number of units
produced but one claim suggests it to be around 500,000 to 700,000 units per year with a small
number of exports to the under developed African markets. The strengths and weaknesses of this
sector were indentified for capitalizing on Strengths and overcoming of weaknesses. Strengths
and weaknesses are listed in proceeding paras. [5]
As the final product requires complete assembly before it can be dispatched to the end consumer,
an assembly plant is required to accomplish the task which is turn creates employment
opportunities in the target country. A brief list of CKD units is given Table 1.
3. Finish Good stored at Factory Warehouses and dispatched to area warehouses in all
across Pakistan as per area sales plan (forecast).
Chapter # 02
2. Literature Review
It is to be noted that there are several additional factors affecting the operation of the
distribution network which is mainly the transportation of goods from their point of
origin to their destination. The firm has to make decisions about its distribution network
according to the type of customer it is dealing with i.e. whether there is going to be a
direct or local delivery of products or services to the customer (POM pg 227). Similarly,
the size of the firm also has a large impact on the distribution network. For example,
market giants of home appliances handle a lot of imports with the help of a number of
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different distribution and logistics companies who may or may not be owned by the firm
itself. Sometimes the firm has to reach out to other agencies to fulfill its distribution
needs by carefully analyzing the costs and benefits offered by each and every one of them
in order to capture the most out of a given market.
Special arrangements are needed to maintain the consistency of the products and or
services offered by the firm to all of its customers whether they are local or international
(POM pg 236). This is can be done by keeping a close eye on the distribution channels
and competing firms. Failure to do so will result in an inconsistent quality on part of the
firm and it can lose the potential value it can attain from its customers. Moreover, if a
new product is coming to the market or the firm makes any changes in its existing
portfolio, whether it is as small as a change in color of a product or as large as complete
rebranding of the product, there must be a quick distribution strategy made beforehand to
make sure that the new and changed product is available to the customer as soon as that
change happens. This is a rather simultaneous process and it says a lot about the control
of a firm on its distribution network.
Distribution is defined as the transportation of the product from the point of production or
transshipment to the point or points where demand has been recorded, in order to satisfy
the expectations of the production enterprise and the consumer (Binioris, 2008). The
physical distribution is part of the supply chain, and its purpose is to deliver
goods/services to the consumers. More specifically to the demand points of the finished
product in the right place and time, in the right quantity and at the lowest possible total
cost (Blanchard, 2010).
Chapter # 03
3. Research Method
Originally, it is essential for an investigator to adopt whatever kind of study is to be
accompanied: affirmative or investigative study. Hair et al. (1995), suggests that
favorable studies are individuals looking for to examine a pre-specified correlation,
whereas investigative studies are individuals which state potential associations in solitary
the greatest over-all procedure and then permit multiple procedures to appraise an
association. In the final circumstance, the scholar is not observing to "authorize" any
relations stated proceeding to the study but in its place permits the technique and the
statistics to describe the landscape of the relations. Present are three sorts of investigation
methods; Quantitative Research, Qualitative Research and Mix Method Research.
lots of rich detail, usually in the form of quotes or examples, to illustrate their
interpretations. So read the results sections carefully, and see whether or not you agree
with how they have analyzed the data.
Research Instrument is one of the most important part of the study as it is essential
to collect the data can provide useful insight into the research topic and then further helps
in analyzing the data for making out conclusions out of that. Questionnaire would be the
research instrument that is used in the existing study. The research instrument that is
being used is adapted from various studies. The quantitative data will be collected using
questionnaires. For the proposed study, research would use questionnaires and the reason
is that questionnaires are a research instrument consisting of a series of questions and
other prompts for the purpose of gathering information from respondents. Although they
are often designed for statistical analysis of the responses, but this is not always the case.
The questionnaire was invented by Sir Francis Galton. As the research approach in the
proposed study is quantitative, hence, the data will be collected using questionnaires
through close ended questions with a scale of 1 – 5 as 1 being the highest such as,
strongly agree and 5 being the lowest as strongly disagree.
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Chapter 4
4. Data Analysis
Once the data is being collected then the most important phase is to make conclusion out of that
while analyzing the data that is derived from the data collection methods. Therefore, the analysis
in this study would be done by using Excel Software that is used for analyzing the results and
generating reports
About 60 questionnaires were filled from the people belonging from various appliances
companies. This was done in order to gain a better data from the respondents for a meaningful
analysis. The table given below contains information all of the respondents on the basis of
demographic variables of the research.
Table 1
Gender
Male 52 87%
Female 8 13%
Age
25 – 30 Years 23 38%
30 – 35 Years 10 17%
35 – 40 Years 9 15%
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50 Years or Above 2 3%
Qualification
M. Phil or PhD 3 5%
Intermediate or Other 1 2%
Work Experience
Marital Status
Single 29 48 %
Married 31 52%
4.2. Interpretations:
The above table shows that the majority of the participants are single males who are between 25
to 30 years of age and have up to 3 years of work experience; hence, the major response is
extracted from those age brackets which consist of rather young employees of the organization.
The quality of respondents is also maintained as all of them are qualified enough for giving the
answers related to the research because majority of the respondents have reputed degrees.
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Have you ever lost your customer (Lost of sales, 60 1.00 5.00 2.06 0.97
Goods Return, Customer purchase from
competitor)because of following factor.
[Communication Gap Between Marketing/Sales
& Distribution Channel]
What is the level of not sale able goods or Dead 60 1.00 5.00 1.65 0.61
Inventory in your warehouse? (Good have no
demand in this territory , Damage Good, Poor
Packing)
4.4. Interpretations:
The questions asked in the survey were helpful in determining the effect of distribution network
and its role in an organization as well as customer satisfaction. Majority of the participants agree
that the logistics and the supply chain network have to be in complete collaboration with the
organization itself to increase profitability, reducing costs and improving the client benefits and
quality assurance. But the common goals are not often agreed upon or rather known by all the
members of the supply chain. For example, the people handling the warehouse stock do not
strictly know the sales target set by the organization. This is quite evident from the survey as
most of the participants show a neutral status in this category. Similarly, it can be seen from the
table above that the location of the warehouse is directly connected to the effectiveness of the
distribution channel and there have been cases where the firm lost its customer due to late
delivery or non-availability of stock. Hence, it is imperative to have an appropriate location for
keeping a good stock and consistent quality of the product.
The survey showed that majority of the organizations like to utilize outsource logistics for their
outward logistics. This may be because outsourcing offers an easy and inexpensive alternative
than the other two options. It does not required too much capital.
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Hybrid (Both) 1
20%
Owned Logistics 2
58.33%
21.66%
Outsource Logistics 3
Most of the software’s used by the organizations for warehouse management system include
Oracle, Excel and SAP. Some organizations use a combination of these software’s for managing
different stages in their respective warehousing systems.
10
8
6
4
2
0
Oracle SAP Customized Manual/Excel WMS
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Chapter 5
5. Conclusion
This study shows the strong relation between distribution network and customer satisfaction
which plays important role in firms progress.
6. References
1- (Ballou, 2001)
2- Pakistan Economic Survey 2017-2018
3- PEL Annual Report 2017
4- Figure 1 and Figure 2 is taken from Presentation by Haier Company to Pakistan Electrical
Manufacturing Association
5- (http://dartways.com/sectors/16)
9- Kotler, Ph.; Keller, K. L.(2008): Marketing Management, 12th Ed., Prentice-Hall, 2006.,
Prijevod, MATE, Zagreb
10- Rosenbloom, B. (2004): Marketing Channels: A Management View, Seventh Edition, South-
Western, Cengage Learning
11- Ostrow, R. (2009): The Fairchild Dictionary of Retailing, Second Edition, New York, Fairchild
Books, Inc
12- Binioris, A., 2008. Logistics: Introduction in supply chain management. Iatrikes Ekdoseis P.X.
Passxalidis, Athens. (Gr).
13- )[ Ballou, R. H., 2004. Bussiness logistics: Supply chain management. 5th edition, Pearson
Prentice Hall, New Jersey.
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7. Definitions:
CBU: complete built unit, Trading Item
This term is mostly used for imports of finish goods, which required no further assembling or
manufacturing process before selling.
Under Invoicing: Some companies show less price of raw material and components on
imports to save Govt. Duties and Taxes.
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8. Appendix:
Survey Questionnaire:
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